Children's TV Lucrative Because it Helps Sell Toys

Walt Disney Co.'s "Doc McStuffins" has emerged as the top-rated cable TV show for preschoolers, taking viewers from Viacom's children's networks and its long-running hit "Dora the Explorer."

"Doc McStuffins," about a 6-year-old who cares for sick toys. Credit: Disney

"Doc McStuffins," introduced in March, is averaging 774,000 viewers ages 2 to 5 at 10 a.m. weekdays on the Disney Channel, according to Nielsen data. The program drew 1.7 million viewers of all ages, including those who recorded and watched the show within a week. "Dora" averaged 667,000 on Viacom's Nickelodeon in that age group and 1.4 million in total, the data show.

Disney, the world's largest entertainment company, introduced "Doc McStuffins" this year along with Disney Junior, a new cable network aimed at 2-to-7-year-olds. The company is taking on Viacom's flagship Nickelodeon kids' channel and its Nick Jr., which is aimed at preschoolers. Viacom has long been the leader in that demographic with shows such as "Dora" and "Blues Clues."

"Disney has executed well and is gaining share overall against Viacom in the preschool and up to 10-year-old kids market," said Martin Pyykkonen, an analyst at Wedge Partners in Greenwood Village, Colo., who follows both companies.

Disney's gains translated into toy sales at the outset of the holiday shopping season. "Doc McStuffins" items were in short supply last weekend, according to Gerrick Johnson, an analyst at BMO Capital Markets in New York. Johnson said his team visited Toys "R" Us, Target and other stores in New York and North Carolina.

"You won't find Doc McStuffins in any store you check," Mr. Johnson said in an e-mail.

"Doc McStuffins," about a 6-year-old who cares for sick toys, runs on both Disney Channel and Disney Junior. Ratings for Disney Junior aren't yet available, according to Disney.

Ratings for "Dora" and Nickelodeon's other shows for younger viewers are improving, said Dan Martinsen, a spokesman for Viacom's Nickelodeon networks. The network's preschool programming has registered higher ratings than Disney this quarter, as it did in the first half, he said. The company offered fewer preschool shows over the summer when older kids were out of school, according to Mr. Martinsen.

"Dora the Explorer" Credit: Nickelodeon

Children's TV is lucrative for entertainment companies because it helps sell toys and other merchandise they license, and generates cable subscriber fees. "Dora" has produced more than $11 billion in revenue at retail since her 2000 debut, Mr. Martinsen said.

But sales at Disney's consumer products division rose 6.7% to $3.25 billion for the fiscal year. Ancillary revenue from Viacom's cable networks fell 13% to $549 million over the same period.

"If it's a battle of consumer products, Disney wins," said Todd Juenger, an analyst who follows both companies at Sanford C. Bernstein & Co. in New York. "They have an almost insurmountable, supply, distribution, shelf-space advantage."